£36,000 of debt for equity release pensioners

Half of people aged over 65 who take out an equity release plan owe money on mortgages, credit cards and loans, with their borrowings averaging 35,991, according to Key Retirement Solutions.

The group said 27 per cent of pensioners taking out one of the plans still had a mortgage on their property, on which they owed 45,600 on average.

It said the high level of mortgage debt among pensioners reflected the fact that many people had been forced to extend their mortgage into retirement after endowment and other investment policies taken out to pay it off had fallen short of the sum needed.

A further 20 per cent of retired people unlocking money from their home had credit card debts of around 9,000, while one in five had outstanding loans averaging 10,447 and 3 per cent had an overdraft of 4,290.

Overall, the group said the average pensioner who had taken out an equity release plan with it spent 297 a month on debt repayments, the equivalent of nearly 30 per cent of their income.

The research, which was based on 3,501 customers, found that older pensioners were more indebted than younger ones, with the over 70s owing an average of 40,958, compared with debts of 29,314 among those aged between 65 and 70.

Dean Mirfin, group director of Key Retirement Solutions, said: "Property wealth has enabled the over-65s in common with the rest of the population to comfortably afford to borrow.

"Servicing debt cannot continue to be a way of life once you no longer have an income to enable you to comfortably make repayments and clearly many pensioners will struggle to juggle loans, credit cards, overdrafts and mortgages."